Digging Coal, Burying Regulations?: Legal Barriers to Proposed Energy Market Reform

KATRINA TOMAS—President Trump’s promise to end the “war on coal” has, in the past month, resulted in agency actions that endeavor to instigate a war on carbon regulation.

On October 10th, U.S. Secretary of the Environmental Protection Agency (EPA), Scott Pruitt, announced a proposed repeal of the Clean Power Plan, the Obama administration’s fully finalized regulation created to reduce greenhouse gas emissions contributing to climate change from existing power plants. Under the prior administration, the EPA estimated that the plan would prevent about 90,000 child asthma attacks and 3,600 premature deaths a year by 2030. These improvements would largely be made in marginalized communities of color who disproportionately live next to sources of toxic pollution.

The proposal to repeal the plan is disastrous from an environmental and public health perspective. Eighteen health and medical organizations released a collective statement decrying the proposed repeal as “inconsistent with EPA’s core mission of protecting public health and the environment.” Further, scholars have criticized the proposal for its improper attempts at sidestepping another formalized regulation. Agencies cannot simply disregard inconvenient facts in their quest to repeal an existing rule, as the Supreme Court informed the Reagan administration when it attempted to get rid of airbag and seatbelt requirements.

Undeniably, the goal of the repeal is an effort by the Trump administration to fulfill its campaign promises of boosting the coal economy through carbon deregulation. However, market realities will make this promise impossible to keep. An Energy Department report released in August, meant to determine whether coal and nuclear were being unfairly driven out by renewables, surprisingly concluded that “the biggest contributor to the coal and nuclear plant retirements has been the advantaged economics of natural gas-fired generation.” Contrary to what Trump may have his constituents believe, coal is not being run out by overzealous politicians. Rather, less efficient and more expensive coal and nuclear power simply cannot compete with lower cost sources of energy.

However, a recent proposal by the Federal Energy Regulatory Commission (FERC) suggests that the Trump administration is willing to go as far as bending market forces to further its goal of promoting a dying and destructive industry. FERC’s proposal is a response to the Department of Energy’s (DOE) request for a major revision of non-discriminatory open access tariffs that have guaranteed that each wholesale purchaser of electricity is charged a comparable price for a comparable amount of electricity. The proposed tariff revisions would provide special benefits for nuclear and coal-fired plants by ensuring that they can recover fully allocated rates of returns. As a result, more expensive and less efficient utilities would receive more resources than more efficient sources of energy.

This DOE proposal to FERC comes as a result of a rarely used provision of the Department of Energy Organization Act of 1977. While the Act maintains a separation of regulatory power between FERC and the DOE, it does allow DOE to propose rules to FERC. FERC—an independent agency—is not bound by DOE’s proposal. Yet, as agencies run by Trump appointees, FERC and DOE will unlikely conflict on the tariff revisions. Should FERC adopt the proposal though, it ought to perform an environmental impact statement (EIS) to fully assess the tariff’s effects on carbon emissions.

The National Environmental Policy Act (NEPA) requires an agency to prepare an EIS when it takes a major federal action that significantly affects the quality of the human environment. Increasing carbon pollution should obviously qualify, as the D.C. Circuit recently emphasized this past summer by holding that FERC must evaluate increases in carbon dioxide emissions through an EIS prior to authorizing construction of natural gas pipelines. At a minimum, the FERC’s approval of the DOE proposal would maintain currently operating coal-fired power plants. Potentially, it could even place back online coal plants that were shut down during the Obama administration. Failing to perform an EIS, therefore, should in theory trigger NEPA claims.

The tariff proposal and the Clean Power Plan potential repeal are imprudent, yet unsurprising, examples of the Trump administration’s attempts at carbon deregulation. However, Trump’s FERC, DOE, and EPA seem to have not yet recognized that regulating carbon pollution is essentially mandated by law. The only way to lastingly prevent carbon regulation would be to revise the Clean Air Act to stipulate that its air quality standards do not apply to carbon. While Republicans in congress have proposed such an amendment, as the law currently stands, agencies cannot continue to dance around carbon regulation without legal oversight.

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